French private equity outperforms other asset classes over 10 years

Since 1987, French private equity has had an average 10.1% return net per year, as measured at end 2014, up from 9.5% at end 2013 on a like-for-like basis.

Over a 10-year period (2004-2014), the average return rises to 11.3% net per year.

Those figures have been recently published in an annual report of the French private equity and venture association, Afic (Association française des investisseurs pour la croissance) and EY, group specialised in assurance, tax, transaction and advisory services.

A total of 714 funds, launched between 1987 and 2014, with a total amount of €51.3bn AUM have been studied.

The study finds out that French private equity outperforms other asset classes over the long term.

With its average annual return of 11.3% over a 10-year period (2004-2014), French private equity’s performance has more than doubled those of listed equity markets, beating the CAC 40 (+4.8%) and the CAC All-Tradable (+5.8%), formerly SBF 250.

Il has also performed better than real estate (+ 6.4%), hedge funds (+5.8%) and fixed income (+5.4%).

In detail, over a 10-year period (2004-2014), the average annual return of venture capital has grown significantly, from 0.8% at end 2013 to 2.1% at end 2014, and reaching 4.4% over a three-year horizon.

“Over 10 years, the performance of buy out capital and growth capital is up from the previous year, at 15.6% and 6.5% respectively compared with 15.2% and 6% on a like-for-like basis at end 2013,” highlights the report.

Michel Chabanel, chairman of Afic, commented : “French private equity returns, which outperform all other asset classes, reflect the quality of this type of financing and support provided to companies.

“In addition, this outperformance went hand-in-hand with low volatility and, therefore, lower risk. Work conducted by some 275 private equity teams in France helped bring to life growth projects ranging from start-ups to mid-tier companies.

“Another source of pride is that, by channeling savings into the real and local economy, private equity makes a major contribution to employment, creating more than 250,000 jobs over the four-year period between 2010-2013, whereas the commercial sector as a whole lost 60,000 over the same period.”

Read more about the Afic and EY’s research : AFIC-Etudes-2015-Performance-nette-2014

Adrien Paredes-Vanheule
Adrien Paredes-Vanheule is deputy editor and French-Speaking Europe Correspondent for InvestmentEurope, covering France, Belgium, Geneva and Monaco. Prior to joining InvestmentEurope, he spent almost five years writing for various publications in Monaco, primarily as a criminal and financial court reporter. Before that, he worked for newspapers and radio stations in France, in particular in Lyon.

Read more from Adrien Paredes-Vanheule

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